Petaluma set to sign 15-year trash hauling contract

A new long-term contract for Petaluma's trash hauling returns to the City Council today, following a review of potential legal challenges based on environmental concerns.

The council was set to vote on a renegotiated contract with Petaluma Refuse & Recycling last month, but was delayed by a last-minute legal objection raised by two environmental groups.

A lawyer representing the Petaluma River Council and the No Wetlands Landfill Expansion suggested the new agreement was akin to a "project," which would require a full environmental review.

City Manager John Brown said the city's legal analysis has concluded changes to the agreement wouldn't cause a physical change in the environment and therefore don't trigger additional environmental study.

Councilman Mike Harris said he hopes the agreement can move forward this time.

"We have an operator that has received universal praise from the citizens. We'll have certainty with this extension, and the financial implications are very positive for the city," he said.

The proposed agreement would make Petaluma Refuse & Recycling the city's exclusive trash hauler for another 15 years in exchange for an extra $750,000 a year toward the general fund and street maintenance.

A change in a city ordinance last year allowed the franchise agreement to be extended without putting it out for bid to other companies.

Under the new contract, garbage rates would rise about 6 percent on July 1, 2013, the first increase since 2009. In the future, they would be tied to a Consumer Price Index type industry standard that has averaged about 3 percent annually, according to a city consultant.

The new agreement would bring an additional $500,000 a year to the city's general fund, totaling $8 million over the term of the contract, including an extra payment in the first three months of 2013. The cost cannot be passed on to ratepayers, according to the agreement.

It also increases by $250,000 a year the "vehicle impact fee" that would be earmarked to the city's street fund to offset the wear and tear large trash trucks cause to city streets. That cost could be passed on to ratepayers.

In October, the first-year rate increase was estimated to be about 4 percent, but according to the latest staff report, the impact fee pass-through would add another 2.15 percent hike to the first year's rates.

That may be a problem for some council members, Councilman Mike Healy said, since keeping rates low was a primary goal of the renegotiated contract.

The revised agreement also adds two consequences if the city is sued in relation to the contract.

If the city is sued under state environmental laws, Petaluma Refuse & Recycling will be required to pay all legal costs but could recoup them from customers in the form of rate hikes.

And if the city loses such a challenge, the previous contract would be reinstated, and the city would be required to refund any payments from the garbage company under the new contract.

In total, the city would net $12.4 million more in the 15 years of the new agreement than under the current one. Although future rates would be raised, delays in increases that could have been instituted under the current contract have saved ratepayers $410,000, according to the staff report.

Petaluma Refuse & Recycling is part of the Ratto Group, which through various subsidiaries has the garbage hauling contracts for eight of Sonoma County's nine cities and the unincorporated areas.